Criminal Assets Research Articles

Fraud and money laundering: the evolving criminalization of corporate non‐compliance

PurposeThe Corporate Veil is seen not only as a means of limiting individual civil legal liability but also criminal liability. This paper seeks to highlight that this philosophy is fast approaching breaking point, and practices which once may have been considered “just business” are now considered criminal. Innocuous companies, their directors and officers have all of a sudden become sitting ducks for criminal prosecution and asset seizure. Corporations potentially risk metaphorical death sentences: their human controllers being labelled and treated as common criminals and accordingly disgraced, incarcerated and confiscated of a lifetime of accumulated wealth. This paper targets the “directing minds and wills” of companies and aims to invoke thought and action on redefining the notion of corporate compliance.Design/methodology/approachAn analysis of recent innovations in mostly UK law regarding fraud and money laundering, with historical comparisons to show the changing community and legal perceptions – “the evolution”. There is also case study analysis and recent examples of community attitudes towards recent high‐profile commercial prosecutions.FindingsThat there is a definite change in how the public, lawmakers and governments perceive corporate non‐compliance, to the extent that most breaches qualify as criminal offences and that due to mutual legal assistance and incentivisation schemes, the risks to corporations and its officers are extremely high and real.Practical implicationsCorporations will need to be genuine about legal compliance beyond merely espousing platitudes and motherhood statements and more towards reinventing the compliance paradigm. This means that merely concentrating on strict legal compliance will no longer suffice. Corporations will need to establish and regularly revisit their values, with more emphasis on embedding a culture of compliance that is attuned to domestic and international community values. To choose to ignore these needs, risks the very existence of the company and also its officers being ostracised both commercially and criminally.Originality/valueTraditionally, papers on this topic tend to concentrate on strictly legal or managerial issues. This paper looks at the issue from a more criminological perspective whilst not compromising legal analysis and business pragmatism, thus allowing an integration of disciplines in a context that can be appreciated by lawyers, managers and social scientists alike.

The Paradox of Expected Punishment: Legal and Economic Factors Determining Success and Failure in the Fight against Organized Crime

The legal and economic analysis presented here empirically tests the theoretical framework advanced by Kugler, Verdier, and Zenou (2003) and Buscaglia (1997). This paper goes beyond the prior literature by focusing on the empirical assessment of the actual implementation of the institutional deterrence and prevention mechanisms contained in the United Nations’ Convention against Transnational Organized Crime (Palermo Convention). A sample of 107 countries that have already signed and/or ratified the Convention was selected. The paper verifies that the most effective implemented measures against organized crime are mainly founded on four pillars: (i) the introduction of more effective judicial decision-making control systems causing reductions in the frequencies of abuses of procedural and substantive discretion; (ii) higher frequencies of successful judicial convictions based on evidentiary material provided by financial intelligence systems aimed at the systematic confiscation of assets in the hands of criminal groups and under the control of “licit” businesses linked to organized crime; (iii) the attack against high level public sector corruption (that is captured and feudalized by organized crime) and (iv) the operational presence of government and/or non-governmental preventive programs (funded by the private sector and/or governments and/or international organizations) addressing technical assistance to the private sector, educational opportunities, job training programs and/or rehabilitation (health and/or behavioral) of youth linked to organized crime in high-risk areas (with high-crime, high unemployment, and high poverty).An empirical jurimetrics model is for the first time developed for the above four anti-crime policy domains in order to assess the legal implementation of organized crime laws. In this context, the empirical results suggest that high-impact prosecutions and effective convictions against criminal organizations are less driven by incarceration of physical persons and more focused on disrupting the production function of criminal groups through asset forfeitures that reduce the amounts of net worth aimed at expanding public corruption rings in order to feudalize States. At the same time, preventive policies aimed at diminishing the flow of youth into criminal activities will also tend to disrupt the street-based operational capacities of organized crime.Accordingly, a paradox of criminal dissuasion emerges that requires the adjustment of Becker’s (1968) framework when applied to organized crime. As a result of the jurimetrics-based analysis presented in this study, just relying on traditional legal sanctions to counteract organized crime (e.g., increased incarceration and/or extradition of physical persons) will tend to create an incentive for criminal groups to expand their corruption rings (in order to protect themselves from higher expected sanctions) thus increasing the feudalization of the state by criminal groups while enhancing their operational capacities. This unwanted result of applying traditional criminal sanctions will occur if the network of criminal assets (net worth in the hands of a network of licit and illicit businesses) is not hampered by intelligence and judicial authorities first. In the cases where criminal asset networks remain untouched, the data in this paper show that criminal groups will simply react to higher expected punishments by re-assigning their relatively untouched financial resources to expanding their rings (scope) and scale of corruption at higher levels in order to protect themselves. As a result, organized crime and high level corruption grow even when the expected punishment aimed at the members of criminal enterprises is increasing at the same time. The jurimetrics-based results in 107 countries show that, in the absence of an active financial intelligence-based criminal assets forfeiture program, high-level corruption grows rapidly while, paradoxically, public sectors continue to devote more criminal justice system resources to incarcerating increasing numbers of organized crime members. At the same time, empirical analysis shows that higher probabilities of sanctions combined with stiffer sentencing guidelines on the books against organized crime members do not play their dissuasive role in the absence of preventive programs to reduce the flow of youth to criminal groups. This constitutes the paradox of criminal sanctions where more frequent and stiffer punishments applied to physical persons lead to higher levels of organized crime and higher level corruption. The deterioration of institutional performance against criminal enterprises in Afghanistan and México and the recent 2001-2007 significant improvements experienced by Colombia and Jordan can be explained jointly by financial intelligence, judicial capacities, and preventive capabilities coordinated by public sectors and civil societies.

Lei ordinária em matéria penal: incongruência latente

The legislative activity of the State, on the issue of law in criminal matters, should attend the legal and criminal assets leaked in the Federal Constitution. To protect those constitutional values, the constitutional legislator has reserved some matters to be treated by complementary law. These materials are considered essentially relevant for driving Federation, can only be regulated by privileged quorum and an absolute majority, which are not required in the ordinary legislative procedure. This stricter requirement in the rite creation of a supplementary law provides a elastecimento the discussion stage legislative, which results in more effective implementation of the principle of ultima ratio criminal law in order to use the system only in situations penalístico really necessary. It is shown, therefore, supplemental law as legal means more appropriate to introduce criminal normal in the legal system in order enhance the operability of penalístico system, approaching the must-be legislative social reality and contributing to the stabilization of the security legal.

Winning the information wars

PurposeRecognising that financially related, personal information is the raw material of successful asset recovery investigations, the paper aims to examine the mechanisms which investigators may use to gather such information and the legal barriers to information gathering.Design/methodology/approachThe paper draws on the author's own practical experience of involvement in criminal asset recovery proceedings in the UK.FindingsIt is the State's obligation to deliver criminal asset recovery in the most efficient and cost‐effective way, consistent with privacy rights and obligations, providing value for money in what is delivered by law enforcement. Doing so will require making better use of financial information held by public sector agencies. There must be no form of financial information which is beyond the reach of an investigator in an appropriate case. If there is, criminals will utilize that weakness to place criminal assets where information in respect of those assets cannot be obtained. If asset recovery is to be successful, it is essential that – to use the metaphor of financial information as “dots” – investigators are able to collect the dots, connect the dots and share the dots.Practical implicationsThe paper identifies: the need to keep the legal tools used to obtain information under regular review; eight core information skills which investigators must develop for effective asset recovery; and the importance of a multi‐disciplinary approach in analysing financial information.Originality/valueThe paper explores UK criminal asset recovery from an informational perspective.

Theorising Asset Forfeiture in Ireland

Various alterations to the Irish legal system have been effected in a bid to counter organised crime, the most radical of which was the introduction of civil forfeiture in 1996. This article examines the forfeiture process carried out by the Criminal Assets Bureau and seeks to analyse it from a theoretical perspective. Civil forfeiture may be regarded as embodying a move away from due process towards crime control, given the avoidance of traditional protections in the criminal process by its location in the civil realm. Moreover, the process may be characterised as an ‘apersonal means of tackling crime’, in which emphasis is laid on the non-moral and regulatory aspects of the law. This article further contends that civil forfeiture represents an adaptation to reality in which the State reconfigures the legislative framework so as to facilitate more readily the suppression of organised crime.

An evaluation of the UK’s anti-money laundering and asset recovery regime

This paper describes the UK’s anti-money laundering and asset recovery laws and the aims and objectives behind the regime since the introduction of the Proceeds of Crime Act in 2002. It then evaluates the regime in terms of the amount of criminal assets recovered, its application against organised crime and its impact upon the price of illegal drugs.

An evaluation of the recovery of criminal proceeds in the United Kingdom

PurposeThe purpose of this paper is to explore how effective the four mechanisms of UK criminal asset recovery are – confiscation, cash forfeiture, civil recovery and taxation – and whether they, or their application, might be enhanced.Design/methodology/approachThe paper draws on both the author's own practical experience of involvement in criminal asset recovery in the UK, and other published material in the field.FindingsWhile an increasing amount is being recovered from criminals by the various agencies involved in the recovery of criminal assets, there is clearly more that can be achieved with the tools provided. In order to do so, there requires to be change at a number of levels, including legislative, structural and cultural.Practical implicationsThe paper identifies a number of challenges, which need to be met if asset forfeiture is to fulfil its potential to reduce crime.Originality/valueThe paper combines a strategic overview as to whether the mechanisms of asset recovery are accomplishing what they are designed to do with a practitioner's grasp of what is occurring at a practical level.

Designing a civil forfeiture system: an issues list for policymakers and legislators

PurposeIn recent years an emerging global trend of introducing legislation to use civil procedures against criminal assets can be detected. However, these civil forfeiture models, which exist vary from jurisdiction to jurisdiction. This paper seeks to identify issues which need to be considered when such a scheme is being designed and examines the options which have been adopted.Design/methodology/approachThe paper examines the legislative provisions in a number of jurisdictions setting out the common issues which have arisen and the range of options which have attempted as potential solutions.FindingsThe paper concludes that jurisdictions which seek to introduce civil forfeiture legislations now have various examples from which to learn but that these models will likely evolve in the face of litigation and experience as legislatures and policymakers attempt to produce fair but effective procedures for the civil recovery of criminal proceeds.Originality/valueAs further jurisdictions respond to this emerging trend and draft their own legislation, there is much to be leant from the issues which others have considered necessary to address and the way in which these issues have been dealt with.

Putting Robin Hood out of business: a proceeds of crime case study

PurposeTo demonstrate how the range of tools provided in the Proceeds of Crime Act 2002 can be used in a strategic and integrated way by law enforcement agencies against organised crime groups.Design/methodology/approachThe case study takes the legend of Robin Hood and reworks the story, portraying Robin as a godfather of organised crime.FindingsThe paper shows how a combination of criminal confiscation proceedings, civil recovery proceedings, cash forfeiture proceedings, taxation action and money laundering charges can be used in an effective way against an organised crime group. It demonstrates how law enforcement should not just focus on taking away the liberty of criminals but how they should also focus on criminal assets and criminal markets.Originality/valueThe paper presents a strategic view of dealing with organised crime in an imaginative and humorous way.

Hit them where it hurts most? The proceeds-of-crime approach in the Netherlands

During the last decade, throughout the world, more emphasis has been put on financial instruments in order to control and prevent money laundering, organised crime (and more recently) terrorism. In most democratic countries, follow-the money-methods have been developed, and legislation has been adjusted in order to find, freeze and confiscate criminal assets. In 1993 new legislation was adopted in the Netherlands to increase the statutory powers to deprive criminals of their assets. The strength and weaknesses of the policy theory behind the proceeds-of-crime approach is being discussed in this article. The findings of several evaluation studies show that neither the enforcement of the law, nor the effects are in accordance with the assumptions of the policy theory. The author concludes, that the high hopes regarding the deprivation of illegally obtained advantage are unrealistic. The same is bound to happen with regard to the follow-the-money-strategy in relation to terrorism.

The constitutional rights of children and the Prevention of Organised Crime Act 121 of 1998

Considers how the rights of children, protected under the Constitution of the Republic of South Africa and its Bill of Rights, can be reconciled with the effects of heavy fines, asset forfeiture and confiscation orders on economic offenders. Clarifies the concepts of forfeiture and confiscation. Outlines the 1998 Prevention of Organised Crime Act (POCA) and considers its provisions in relation to the position of children and young people as innocent third parties in cases of civil and criminal asset forfeiture. Includes a short discussion of corresponding provisions in US law. Suggests that, as legislation currently does not specifically provide for children, the POCA should be amended by incorporating, mutatis mutandis, provisions from the Mediation in Certain Divorce Matters Act.

International cooperation and mutual assistance under the Proceeds of Crime Bill 2001

Outlines the new UK Proceeds of Crime Bill, which received the Royal Assent in July 2002. Evaluates how it enhances and even demands international cooperation, most of which text is in Part 11. Details Part 11’s provisions, notably section 429 on handling external requests and orders, section 430 on cases where external inquiries are related to investigations made abroad, and section 432 on Interpretation; plus Part 1 sections 4, 74 and 84. Looks at problematic areas in the Bill, one of which is that there are different parts and sections for different territories; also, it provides for a new body, the Criminal Assets Recovery Agency (CARA) which will not operate in Scotland, so that drug dealers might escape with their proceeds. Moves on to the international legal framework for cooperation, featuring the 1990 UN Model Treaty on Mutual Assistance in Criminal Matters.

The hiding of wealth: an Argentinian perspective

Describes the recent increase in known money laundering activities in Argentina based on drug dealing, smuggling and false export transactions of precious metals etc, as a result of the country’s vulnerable borders. Outlines briefly the first Money Laundering Bill of 1996, and finally the Cover‐Up and Laundering of Criminal Assets Law of 2000, which penalises those who permit laundering activities because of negligence, as well as those engaging in them; it also set up the Financial Information Unit, and imposes the duty of reporting suspicious transactions, ie those that are unusual or unjustified. Continues with the rules against money laundering previously issued by the Argentine Central Bank and the National Securities Commission, and the investigative committee formed from the House of Deputies.

Knowledge Management in the Proceeds of Crime Community

The title of this paper immediately raises a number of issues. Is there such an entity as ‘the proceeds of crime community’? If such an entity exists, can it be ‘managed’? What role does knowledge play in the community? This paper attempts to explore such issues, with particular reference to the field of financial investigation. It does so in the light of the report entitled ‘Recovering the Proceeds of Crime’, published by the Performance and Innovation Unit of the Cabinet Office, which was tasked with considering how effective the removal of criminal assets was in tackling crime and assessing whether more should be done, and which, it is submitted, largely represents the distilled knowledge of the proceeds of crime community.

Ireland: The Celtic Tiger Bites — The Attack on the Proceeds of Crime

In 1996 the Irish legislature (the Oireacthas) enacted radical legislation as part of a new initiative to deal with organised crime, and with it a specialist agency, called the Criminal Assets Bureau, to enforce the new provisions. In proposing the new measures the Minister for Finance said:

Bank Secrecy

Bank secrecy and how it facilitates multiple opportunities for money laundering and various other criminal activities are matters in which governments must be interested. These matters have recently been the subject of a study carried out on behalf of the United Nations entitled Financial Havens, Banking Secrecy and Money Laundering. The study concluded that criminal organisations are making wide use of the opportunities offered by financial havens and offshore centres to launder criminal assets, thereby creating roadblocks to criminal investigations.

Civil Forfeiture of Criminal Assets

Civil Forfeiture of Criminal Assets

Money Laundering, Criminal Assets and the 1998 Proposed Reforms

In November 1998, the Home Office Working Group on Confiscation, a group convened in 1990 to monitor the operation of confiscation and money‐laundering legislation, released its third report, a comprehensive examination of the confiscation and money‐laundering control regimes in England and Wales. The report recommends numerous changes, some of which fill gaps in the present framework and others that radically alter the methods deployed to ensure that criminal profits do not lie secure in the hands of their owners. Previous reports heavily influenced subsequent legislative developments so it is anticipated that this document foreshadows the legislative course to be pursued by the Labour Government in the near future.

Confiscation of Criminal Assets

Confiscation of Criminal Assets

The freezing of criminal assets

The freezing of criminal assets